Indexation option and RBI rate stability are good omen for the growth of housing demand.
Anuj Puri, Chairman – ANAROCK Group, said: The RBI’s decision to keep repo rates unchanged at 6.5% for ninth consecutive time aligns well with yesterday’s announcement on indexation benefits. It sets a positive tone for the housing industry. Maintaining interest rates offers consistency in borrowing costs, which will prompt more aspiring homebuyers to consider taking the plunge – and thus drive demand in the housing market. With interest rates staying steady, EMIs will remain manageable for current and potential homeowners, potentially leading to increased home sales – particularly in the price-sensitive affordable segment.
Yesterday’s announcement regarding indexation brings tax advantages for property investors, as it permits adjustments to the purchase price keeping inflation in mind, reducing capital gains tax burdens upon property sale. This provision increases the appeal of real estate investments, which will spur demand and capital flow into the housing sector. These combined actions bolster investor trust and position real estate as an avenue for long-term wealth growth.
As housing demand rises due to favourable interest rates and taxation, we can expect overall boosted growth. This will encourage more project construction, job opportunities and broader economic gains. The collective impact of these measures improves affordability levels and boosts demand dynamics in India’s housing segment.
Housing sales across the top 7 cities have been phenomenal in the last few quarters, even though prices are rising steadily. As per ANAROCK Research, we saw total housing sales of nearly 2.51 lakh units across the top 7 cities in H1 2024 – the highest half-yearly sales in the last decade.
Meanwhile, average residential prices across the top 7 cities have seen a significant jump in the last one year – ranging between 13-39% in Q2 2024 when compared to Q2 2023. Thus, the breather which RBI’s unchanged repo rate will provide to home loan borrowers is apt and welcome.
Saket Dalmia, President of India Sotheby’s International Realty: The RBI’s decision to maintain the policy rate aligns with expectations, given the current inflation and global economic scenario. While the near-term outlook for global growth appears positive, the medium-term outlook faces challenges due to demographic shifts, climate change, geopolitical tensions, and fragmentations. Despite this, domestic economic activity remains resilient.
The MPC emphasized the need to maintain a disinflationary stance to ensure inflation aligns with targets while supporting growth, thus keeping the policy rates unchanged.
Stable interest rates are beneficial for various industries, especially real estate.
We support the RBI’s current stance and anticipate future rate cuts, which would positively impact the real estate sector and contribute to overall economic stability and growth.
Vimal Nadar, Senior Director & Head, Research at Colliers India: Amidst swift changes in global economic undercurrents with a moderate view on global economic outlook, RBI has remained cautious and maintained benchmark lending rates at 6.5% for the ninth consecutive time. Inflation, despite being within 6% levels, remains above the benchmark of 4% and thus, continuation of withdrawal of accommodation. In the first MPC meet after the Budget, the RBI has projected a GDP growth rate of 7.2% for FY 2025 led by robust high frequency economic indicators across key sectors.
Interestingly, stability in interest rates coupled with the recent announcement to rationalize stamp duty charges along with concessions for women homebuyers bodes well for real estate sector especially residential segment. Strong visibility in financing charges should help homebuyers and developers alike in the upcoming festive season.
Moreover, partial withdrawal of the applicability of the revised LTCG tax arising out of sale of land & buildings retrospectively provides elbowroom to effect housing sales with minimal tax outgo. This is likely to buoy investors’ & homeowners’ sentiment and thus the real estate sector at large throughout 2024.
Shrinivas Rao, FRICS, CEO, Vestian: RBI maintained status quo for the ninth consecutive time and kept the repo rate at 6.5%. Sticky inflation, elevated food prices, and global macroeconomic uncertainty likely influenced this decision. A steady monetary policy for the past one and half years has ensured stability in the real estate sector, boosting demand for all asset classes. This upward momentum is expected to continue as the repo rate is anticipated to remain stable for a couple of more months due to rising inflation amid increasing geopolitical frictions in the Middle East.”
Vedanshu Kedia – Director, Prescon Group: We commend the Reserve Bank of India for its decision to keep the repo rate at the moderate level of 6.5%, to adequately balance the inflation and development goals of the country. The government’s commitment to ensuring rate stability is a positive step, it will likely maintain growth in the real estate and infrastructure sectors. We are particularly encouraged by the balanced approach on maintaining liquidity and supporting financial institutions, while balancing inflation. With these measures in place, we remain optimistic about the future of India Inc and anticipate a positive impact on the broader economy.
Prashant Sharma, President, NAREDCO Maharashtra: We welcome the RBI’s decision to keep the policy repo rate unchanged at 6.5%. This decision reflects a cautious yet stable approach to monetary policy amidst global economic uncertainties. For the real estate sector, the steady interest rates are a positive signal, providing a conducive environment for homebuyers and investors alike. It is imperative to maintain this stability to continue fostering consumer confidence and ensuring the sustained growth of the sector. We hope that this decision will further stimulate demand in the housing market, particularly in the affordable and mid-segment categories, which are crucial for the overall development of the real estate industry.
Pritam Chivukula, Vice President, CREDAI-MCHI and Co-Founder & Director, Tridhaatu Realty:
We welcome the RBI’s decision to keep the policy repo rate unchanged at 6.5%, which reflects a cautious and balanced approach. The real estate sector, particularly in metro cities like Mumbai, has been experiencing a steady revival, and the current rate stability will help sustain this momentum. Homebuyers will continue to benefit from the favorable lending rates, encouraging more investments in the housing market. However, we urge the government to consider further supportive measures that can enhance liquidity and provide long-term stability to the sector. The focus should be on boosting consumer sentiment, which will ultimately drive growth in real estate and allied industries.
Rajeev Ranjan, Co-Founder & CEO, The Mentors Real Estate Advisory Pvt Ltd: The decision by the Monetary Policy Committee to keep the policy repo rate unchanged at 6.5% is a balanced approach that reflects the current economic landscape. In the real estate sector, stability in interest rates is crucial for maintaining buyer confidence and ensuring steady demand, particularly in the housing segment. While the unchanged repo rate continues to offer a favorable borrowing environment, it also signals the RBI’s intent to monitor inflation closely without disrupting growth. We anticipate that this stance will help sustain the momentum in the real estate market, encouraging more homebuyers to take advantage of the existing financial conditions.
Shraddha Kedia-Agarwal, Director, Transcon Developers: We commend the RBI’s decision to maintain the policy repo rate at 6.5%. The real estate sector has shown resilience amidst fluctuating economic conditions, and the stability in interest rates is a positive sign for both developers and homebuyers. This decision will help maintain the momentum in the housing market, encouraging potential buyers to invest in their dream homes with confidence. We remain optimistic that the steady rates will continue to bolster the real estate sector and support the overall economic recovery.
Rohan Khatau – Director, CCI Projects: RBI’s decision to maintain the policy rate is a prudent step, as we are able to control inflationary trends. The focus on controlling inflation to support growth is commendable as it will foster a favorable environment for the real estate sector, enabling growth and stability. We are optimistic that these measures will enhance consumer confidence and encourage home ownership, laying a strong foundation for future progress.
Samyak Jain, Director, Siddha Group: We welcome the RBI’s decision to maintain the policy repo rate at 6.5%, which reflects a positive approach toward sustaining economic growth while keeping inflationary pressures in check. The real estate sector has witnessed a steady demand, and this move by the RBI provides continued stability, allowing homebuyers to benefit from favorable interest rates. As we move forward, we hope this stability will encourage more consumers to invest in real estate, further driving growth in the sector.
Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited (SDPL): We welcome the RBI’s decision to maintain the key policy rate at 6.5% which aligns with our economic growth policies. The focus on controlling inflation to stimulate growth will undoubtedly spur housing demand, benefiting homebuyers and developers alike. We are optimistic that these policies will further enhance market confidence and drive sustained growth in the real estate industry.”
